What's in the Welfare Reform Bill?

The Government has pledged the biggest shake-up of the benefits system in 60 years, saying that 2.7 million households will be better off and almost a million people will be taken out of poverty.

Ministers published the Welfare Reform Bill, which will include:

* Universal Credit, which the Government said will make more than two-and-a-half million of the poorest people in Britain better off by making work pay.

"This will finally make it easier for people to see they will be consistently and transparently better off for each hour they work and every pound they earn," said the Department for Work and Pensions;

* The Personal Independence Payment which will replace Disability Living Allowance with a new, more "transparent and sustainable" benefit, supported by a new assessment of individuals to determine who will benefit most from additional support;

* By next year the Government will have new powers to tackle the problem of fraud and error, which under the current system was described as "highly susceptible", costing the taxpayer around £5.2 billion a year. The new measures include tougher "one-strike, two-strike and three-strike" rules, with a benefit ban of three years for people who offend repeatedly.

A single investigation service and a new mobile regional taskforce will be set up to investigate every claim in high fraud areas, along with so-called civil penalties of £50 for more minor offences;

* The Government said it was not reasonable that households on out-of-work benefits should receive a greater income from the state than the average working household receives in wages, announcing a cap, linked to average weekly earnings, which will limit the amount of benefits a household can receive;

* Contributory Employment Support Allowance (ESA) will be limited to 12 months for those who are able to prepare for work. Those with low or no other sources of income would qualify for income-related ESA once their contributory ESA had ended.

Ministers said this underlined the principle that ESA claimants are expected to move towards the workplace and will reduce long-term inactivity or benefit dependency.

Work and Pensions Secretary Iain Duncan Smith said: "The welfare system was created to meet the demand for a fairer society. Today, this Bill will seek to restore the welfare system to those founding principles.

"Our reforms will end the absurdity of a system where people too often get rewarded for doing the wrong thing, and those who strive to do the best by their families get penalised.

"The publication of the Welfare Reform Bill will put work, rather than hand-outs, at the heart of the welfare system. It will ensure that we continue to provide appropriate support for those genuinely unable to work, as we must and as we should, and it will provide a fair deal for the taxpayer."